KUALA LUMPUR: The Association of Stockbroking Companies of Malaysia (ASCM) has called for Bursa Malaysia to be suspended in line with the recent Movement Control Order declared by the government amidst the Covid-19 pandemic.
Its chairman Datuk Dr Azman Manaf said the move would protect the market from severe damage that might take a decade to heal.
Without evasive action in place immediately, the impact of Covid-19 on the stock market would be catastrophic and possibly even drive the FBM KLCI below the 1,000 mark, he said.
“Such a catastrophe will definitely affect the national economy in the worst possible way.
“Banks will carry a huge amount of non-performing loans and public listed companies would see tremendous erosion of market capitalisation, while brokers will carry big contra losses and thousands of retail investors will experience bankruptcy,” he cautioned.
He opined that with the suspension of Bursa Malaysia, all participants of the stock market such as investors, brokers, investment bankers, fund managers and pension funds like Employees Provident Fund, Lembaga Urusan Tabung Haji, Lembaga Tabung Angkatan Tentera and Permodalan Nasional Bhd, would be able to utilise the time and relaxation to re-engineer their strategic and trading portfolios, as well as avoid liquidation of accounts and force selling of leveraged accounts.
“The closing of FBM KLCI at 1,239.01 points on Wednesday showed that it had retraced by more than 28 per cent from the end of December 2019, which stood at 1,588.76 points,” he said, stressing that market participants had already endured two major events recently, namely the change of government and the Covid-19 pandemic.
Stock exchanges around the world have plummeted, the worst being Wall Street, he pointed out.
He further stressed that the Malaysian stock market had also experienced a 23 per cent drop in market capitalisation from RM1.04 trillion on Dec 31, 2019 to RM804.63 billion on March 18, 2020.
On Tuesday, the Philippines suspended its stock exchange, becoming the first country to do so in response to the widening pandemic.
The suspension order in the Philippines was called after stock markets and oil prices went into freefall following the failure by the country’s central bank to dampen investors’ fears with fresh stimulus measures. – Bernama